European stock markets pared earlier declines, closing slightly lower. The prospect of direct negotiations between Israel and Lebanon alleviated concerns over a fragile ceasefire agreement in the Middle East.

The Stoxx 600 index ended down 0.1%, after falling as much as 0.8% earlier in the session. Oil stocks advanced, supported by rising Brent crude prices, with BP, Equinor, TotalEnergies, and Shell leading the gains. Media and travel & leisure sectors were among the worst performers.

In late trading, Israeli Prime Minister Benjamin Netanyahu agreed to hold direct talks with Lebanon, after which Brent crude gave back some of its gains. However, the sustainability of the ceasefire remains uncertain ahead of U.S.-Iran discussions. The Strait of Hormuz remains largely closed, with Iran claiming that several terms of the agreement have been violated, including Israeli strikes on Lebanese targets.

On the corporate front, France's Alstom fell 8.5% after the train manufacturer warned of unfavorable currency impacts in its earnings preview.

A fund manager at Paris-based Richelieu Invest noted that while investors are relieved by the ceasefire and the global economy avoiding a recession, they will closely monitor the upcoming earnings season to gauge the extent of the conflict's impact.

She added, "The first-quarter earnings season starting next week will be crucial for assessing the impact of the March conflict on sectors such as consumer goods and luxury. Given the ongoing economic resilience, investors need to return to fundamentals to see what has already been priced into the market."